Question

Fair Value Journal Entries, Trading Investments The investments of Charger Inc. include a single investment: 18,500 shares of Raiders Inc. common stock purchased on February 24, 20Y1, for $46 per share including brokerage commission. These shares were classified as trading securities. As of the December 31, 20Y1, balance sheet date, the share price had increased to $52 per share. a. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, 20Y1. If an amount box does not require an entry, leave it blank. 20Y1 Feb. 24 Investments-Raiders Inc. Stock 851,000 Cash 851,000 2011 Dec. 31 Valuation Allowance for Trading Investments Unrealized Gain on Trading Investments

Answer 1

Answer Journal Entry Date 2011 Feb. 24 Credit Debit $851,000 General Journal Investments-Raiders Inc. Stock Cash (18,500 shares x $46 per share) (To record the purchase of investment) $851,000 $111,000 $111,000 2011 Dec. 31 Valuation Allowance for Trading Investments Unrealized Gain on Trading Investments (18,500 shares x ($52 - $46)] (To record the Unrealized Gain on Investment)